Money Management for College Grads
Congratulations to the young adults who have recently graduated from college. The first few months are about personal freedom and finding one’s path as an adult. Building solid money habits is a big part of that. Most recent grads are managing money alone for the first time, all while trying to find work, a place to live and pay off student loans. While this may seem daunting, here are some tips to help get started:
- Budgeting: This is the first important step in financial planning, because you need to know where every dollar is going. It’s a three-part exercise: track spending, analyze where your money has gone and find ways to direct that spending more effectively toward saving, investing and erasing debt.
- Saving: A graduate’s first savings goal should be to set up an emergency fund to cover everyday expenses such as the loss of a job or a major repair. The ultimate purpose is to avoid additional debt or draining savings and investments. Ideally, this should cover at least four months of living expenses.
- Retirement: You just graduated from college and the last thing on your radar is retirement. However, success in retirement depends on saving and investing as soon as possible. Determine the right amount to withhold from your paycheck each week, and make sure to capitalize on employer matching. Have your retirement taken out of your paycheck before you receive it, so you don’t miss it.
- Credit Report: Get in the habit of reviewing your credit report from the beginning. Receive all three of your credit reports from the three credit bureaus each year to check for inaccuracies and potential identity theft.
New grads should embrace good money habits to help them through all the financial decisions they’ll face.